What is exempt from sales taxes in Hawaii?

Many states have special sales tax rates that apply to the purchase of certain types of goods, or fully exempt them from the sales tax altogether. Here's how Hawaii taxes five types of commonly-exempted goods:

About the Hawaii Sales Tax

While the state of Hawaii has no official sales tax,the state employs the Gross Receipts Tax and a Use Tax, which is imposed on the business rather than the buyer. These taxes are imposed on nearly all transactions, including services. Because the state allows businesses to pass this tax on to the buyer (which most do), it can be considered a "de facto" sales tax.

It is worth noting that Hawaii, unlike any other state, applies the excise tax to rent, perishable foods, and medical services. In addition, businesses are not required to state the tax separately on the receipt. Hawaii also allows a "tax on tax" to be charged, meaning that the tax percentage can be quite high on certain transactions.

Is the Hawaii Sales Tax Destination-Based or Origin-Based?

Hawaii is a destination-based sales tax state, which means
that sales tax rates are determined by the location of the buyer when the transaction is completed. This means that, for orders placed via the internet/mail by a customer within Hawaii from a Hawaii vendor, the vendor must collect a sales tax rate applicable at the buyer's address (including any applicable local sales taxes). This can significantly increase the complication of filing your sales tax return, because different sales tax rates must be charged to different buyers based on their location.

Is Hawaii a Streamlined Sales Tax State?

Hawaii is not a member of the Streamlined Sales and Use Tax Agreement. The SSUTA is an agreement adopted by about half of states that ensures that their sales tax laws are simplified to lower the costs associated with compliance.

Contact the Hawaii Department of Taxation

The Hawaii Excise Tax is administered by the Hawaii Department of Taxation. You can learn more by visiting the sales tax information website at tax.hawaii.gov.

Phone numbers for the Excise Tax division of the Department of Taxation are as follows:

Local Phone: (808) 587-4242

Toll-Free Phone: (800) 222-3229

Learn More: Our Book Recommendations

If you would like to learn more about how to manage your Hawaii sales taxes, we recommend the following books:

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